Need long-term funds for a low-interest! SBA loan is for you..

Need long-term funds for a low-interest! SBA loan is for you..

• Jan 07, 2020
• админ
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Need long-term funds for a low-interest! SBA loan is for you..         

Small Business Administration (SBA) is an agency managed by the government of the United States. It was formed on July 30, 1953, with a vision to enhance country’s economy by empowering startups and small businesses across the USA by providing cash flows and capital on cheap interest rates, easy installments and longer time for repayment. Head office of the agency is located in Washington and it has its offices in all the states of the country. Activities of the agency are described as the following “3 Cs”:

• Capital
• Contracts; and
• Counseling

THE MISSION OF THE AGENCY IS DESCRIBED AS:

“to maintain and strengthen the nation’s economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters”  There is an administrator and a deputy administrator for the Small Business Administration (SBA) and there is an associate administrator or director for following offices:

• Business Development
• Capital Access
• Communications and Public Liaison
• Congressional and Legislative Affairs
• Credit Risk Management
• Disaster Assistance
• Entrepreneurial Development
• Entrepreneurship Education
• Equal Employment Opportunity and Civil Rights Compliance
• Faith-Based and Neighborhood Partnerships
• Field Operations
• Government Contracting and Business Development
• Hearings and Appeals
• HUBZone Program
• International Trade
• Investment and Innovation
• Management and Administration
• Native American Affairs
• Performance Management
• Small Business Development Centers
• Veterans Business Development
• Women’s Business Ownership

There is a wide range of loan programs offered by Small Business Administration (SBA) for startups and small businesses. The purpose is not to make money from interests but to help entrepreneurs in the USA to start a business or expand their operations easily. There are six types of Small Business Administration (SBA) Loans which are briefly explained below so that you can choose what suits you best:

1       SBA 7(a) Loan:

This is the most common type of Small Business Administration (SBA) Loans. SBA 7 (a) loan can be obtained for working capital, equipment purchases, refinance debt, buy a business or franchise, buy the commercial real estate and leasehold improvements. If you need SBA 7 (a) loan your credit score should be more than 680.

Down payment for an SBA 7 (a) loan could be 10-20% of the total amount. And SBA 7 (a) loan do not need to be fully collateralized. However, you will need small collateral because it is partially guaranteed by the agency.

When it comes to the interest rate, you will be simply amazed. Yes, the interest rate on SBA 7 (a) is just 5.75 – 8.25 %. And the loan amount could be up to Five Million Dollars.The repayment period for working capital loans is up to 10 years and for commercial real estate loans, it is up to 25 years.

2      Community Development Corporation (CDC) / SBA 504 Loan:

This Small Business Administration (SBA) Loan is for small businesses to purchase, construct or renovate commercial real estate or to purchase other fixed assets for them. Actually, there are two lenders under this program:

1. Bank, Credit Union or Non-Banker Lender (lends up to 50% of the project cost)

2. Community Development Corporation (CDC) (lends up to 40% of the project cost)

The remaining 10% of the cost of the project is paid by the borrower as a down payment of the Small Business Administration (SBA) loan. Credit score required for this Small Business Administration (SBA) loan is 680+. The interest rate on the loan varies from 4.08 – 4.43%. The maximum funding you get from a CDC / SBA 504 loan is 14 million dollars and the repayment term is 10 or 20 years.

3      SBA CAPLines Program or SBA Line of Credit:

This Small Business Administration (SBA) Loan is not for long-term financing but it comes with a payback period of 5 years. SBA CAPLines Program helps small businesses to meet their short-term and seasonal working capital requirements. This program requires short-term collateral for the loan with a 660+ credit score. The repayment cycle for SBA Line of Credit is up to 5 years and the interest rate varies from 5.75 – 10%.

4     SBA Export Loan:

This type of Small Business Administration (SBA) Loan is specifically designed to help small exporters to start their new exporting operations and smoothening cash flows to offer better terms to international clients.  The exporters should have a 660+ credit score to get SBA Export Loan. Term of SBA Export Loan is up to 25 years the interest rate varies from 5.75 – 10%

5     SBA Disaster Loan:

This Small Business Administration (SBA) Loan was designed to help small businesses located in a declared disaster zone and suffered damage due to property or economic losses. Also, any business that loses a key employee who is a military member can also apply for an SBA disaster loan.

The business must have the ability to repay the loan with a credit score of 660 or above to qualify for this small business administration (SBA) loan. The interest rate for an SBA disaster loan varies from 4 to 8 percent and it comes with a term up to 25 years.

6      SBA Microloan Program:

SBA Microloan is issued through nonprofit, community-based organizations in amounts up to 50 thousand. Businesses cannot use this Small Business Administration (SBA) loan to refinance any debt or to purchase any real estate. You will need to have just a 640+ credit score to get this and will require some collateral as well. The payment term for the SBA Microloan Program is up to six years and the interest rate varies from 8 to 13 percent.